On 8 April 2020, the Gambling Commission (“the Commission”) published its reasoning for the package of sanctions it handed down to online gambling operator Triplebet on 17 February 2020, which included a suspension of its gambling licence and a fine.
Triplebet operates a betting exchange and remote casino business, trading as “Matchbook”. On 13 August 2018, the Commission commenced a licence review of the operator, which led to a referral to the Commission’s Regulatory Panel (the “Panel”). On 17 February 2020 it was announced that the Commission had decided to suspend Triplebet’s licence and the Commission has now published here its reasons for doing so as well as full details of the package of sanctions it imposed.
In summary, the Panel identified Triplebet as liable for the following failings:
- Deficiencies in the establishment and implementation of its anti-money laundering (AML) and social responsibility policies;
- Lack of monitoring of its business relationships;
- Its approach to transfers of money between different accounts and customers;
- Lack of due diligence in relation to members of gambling syndicates; and
- Non-compliance with the social responsibility codes of practice.
The Commission decided to publish the Panel’s findings and reasons on the basis that there are wider lessons for other gambling operators to learn from Triplebet’s failings.
Reasons and Findings
In regard to AML policies, the Commission ruled that in breach of its obligations under its licence and the Money Laundering Regulations 2017 (“the MLR”), Triplebet failed to:
- Set out objective circumstances which would trigger a risk reclassification for customers;
- Set out the specific enhanced due diligence (EDD) measures which would be implemented for particular categories of high risk customer;
- Provide guidelines for when source of funds and/or source of wealth investigations should be undertaken; and
- Require customer interactions and monitoring to be adequately recorded.
In addition to the above, the Commission held that Triplebet did not update its AML policy between November 2014 and October 2017 and failed to ensure effective implementation of these procedures and controls. Whilst Triplebet argued that it had relied on its staff to implement its policies, the Panel held that the operator had not provided sufficient guidance to its staff in this respect.
Triplebet was also held to have breached its licence and the MLR by not appropriately monitoring business relationships in several respects, including:
- Insufficient emphasis on addressing anti-money laundering risks;
- Insufficient recording of monitoring outcomes; and
- Failing to take appropriate steps in accordance with procedures, such as to obtain documentary evidence relating to source of funds.
For example, Triplebet was unable to produce documentation demonstrating ongoing monitoring in a number of cases in which players were gambling large sums of money (including one customer who put £2 million at risk in one day). The operator was also found to have failed to carry out sufficient checks against its top ten customers on the betting exchange, which were confined to identity and address checks, with no risk profiles or requests for source of funds. There was also no evidence of the operator considering the monitoring of, or interaction with, these customers.
Triplebet submitted that many of these players were professional gamblers and therefore at low risk of money laundering but the Panel found there to be a lack of evidence to support Triplebet’s understanding of these customers as professional gamblers. In addition, the Panel rejected the notion that professional gamblers were low risk, on the basis that money laundering includes the use of criminal funds to fund gambling as a leisure activity and criminals may be habitual gamblers just like anyone else.
In regard to account-to-account transactions, Triplebet was found to have allowed customers to transfer money to other customers or accounts, including abroad, without the kinds of controls which would attach to banking transactions for similar amounts. In particular, it was shown that prior to October 2017, account-to-account transfers were not documented at all and, while post-October 2017 transfers were documented, they failed to record the reasons for these transfers. Finally, some customers transferred monies after depositing them with little or no play. The Panel found these transactions to be a money laundering risk.
There were no records of Triplebet refusing these transfers and the operator ceased these transactions for UK customers only in May 2018 and for non-UK customers in January 2019, following intervention from the Commission.
One of Triplebet’s main customers was a syndicate, the lead contributor of which was a professional gambler with a beneficial interest in Triplebet. This syndicate matched bets on the exchange in excess of $55 million without prompting any risk assessment. Triplebet submitted the customer was in reality the lead contributor, and there was therefore no obligation to conduct source of funds or source of wealth checks on the other members of the syndicate. But the Panel found that Triplebet had failed to carry out the necessary due diligence. Triplebet suspended all activity for syndicates pending the results of due diligence measures on all syndicate members in line with the Commission’s recommendations.
In rejecting Triplebet’s submissions, the Panel made some other important points, including:
- The MLR and licence conditions are focused on taking steps properly to identify and mitigate money laundering risks and so it was irrelevant that the review of Triplebet’s licence had not uncovered evidence of money laundering; and
- General knowledge of VIP customers does not satisfy the requirements for monitoring and due diligence under the MLR and the Licence Conditions and Codes of Practice (“LCCP”).
Triplebet was further found to have displayed social responsibility failings under the LCCP by not putting into effect policies and procedures for customer interaction where players indicated problem gambling. For example, there was one instance of a player gambling large sums of money without any interaction across two days. Another player who registered, played and self-excluded in one day was able to reopen his account 6 months later and play for 10 hours a day on consecutive days and lost a large sum before self-excluding again without any interaction taking place.
Triplebet accepted that its policies did not comply with the Social Responsibility Code provisions in force at the time and did not contain provisions in relation to high value or VIP customers (as required by the LCCP from May 2015) until June 2018. This meant Triplebet failed to identify and interact with at-risk players and syndicates. The Panel found that Triplebet had adopted an effective responsible gambling policy in June 2018.
The Commission’s sanctions comprised the following:
- A suspension of Triplebet’s UK operating licence with immediate effect;
- The imposition of additional conditions to the UK operator’s licence; and
- A financial penalty of £739,099 (including the costs of the Commission’s investigation).
The Panel decided that the suspension will be lifted only once it has received a report from independent auditors, supported by a letter of assurance from Triplebet’s directors, confirming that Triplebet has implemented all outstanding recommendations of compliance consultants.
The additional conditions imposed on Triplebet’s operating licence are as follows:
- Full implementation of compliance consultants’ recommendations;
- Continued operation of these changes to meet the recommendations;
- Instruction of auditors to report to the Commission on the implementation of the recommendations, with the instructions to be approved by the Commission;
- Provision of auditors’ reports every 6 months demonstrating compliance with the consultants’ recommendations and licence conditions, each report supported by a letter of representation or assurance from Triplebet’s directors and personal management licence holders; and
- Refrain from permitting or facilitating account-to-account transfers.
The financial penalty imposed on Triplebet was influenced by a number of aggravating factors, which were stated to be:
- The breaches spanned a 3-year period;
- The breaches arose in circumstances similar to previous cases that had led to the publication of lessons to be learned;
- The breaches continued during the period of the licence review until Triplebet suspended syndicate betting on 9th August 2019; and
- Triplebet’s responsible gambling policy did not cover what is required by Social Responsibility Code 3.4.1 until June 2018.
The Panel found that there were no mitigating factors in this instance.
In a statement published by the Commission, chief executive Neil McArthur emphasised the need for operators to have processes that further both player protection and anti-money laundering initiatives, or else face action by the Commission in the form of fines, licence suspensions or even licence revocations.
Neil McArthur continued, “Any operator that doubted that we were ready and willing to use the full range of our regulatory powers should think again. All operators need to learn the lessons from this case and our other enforcement cases.’’
A spokesman for Triplebet said the operator had implemented a series of recommendations made by a performance improvement consultancy, including establishing a compliance committee and a new responsible gambling algorithm, and that they “are committed to upholding every aspect of the UKGC regulations”
This case serves as another reminder that the Commission is determined to stamp out regulatory non-compliance at all levels in the industry. Gambling operators, particularly in the online market, should be diligent in updating and maintaining their policies and processes if they want to avoid finding themselves in the Commission’s firing line.
It may also be worth noting the Commission’s views on professional gamblers, indicating that operators should not presume such gamblers to be low risk for money laundering and should treat these customers no differently from others under their AML policies and procedures.